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IRS accused of granting $500 mln in suspicious contracts to a small business called Strong Castle founded in 2011

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Published time: June 26, 2013 16:47                                                                            

Women walk out of an Internal Revenue Service office in New York (Reuters)Women walk out of an Internal Revenue Service office in New York (Reuters)

A Virginia IT company inappropriately secured $500 million worth of IRS contracts based on false statements and ties to an agency official, according to a congressional staff report released on Tuesday.

The House Oversight and Government Reform Committee released a  report accusing an Internal Revenue Service employee of procuring  inappropriate contracts for a small business called Strong  Castle, which was founded in 2011 by a man named Braulio  Castillo.

In 2012, Castillo received more than $500 million in IRS awards  for his technology firm and a mere $465,780 from other federal  government agencies. The report accuses IRS deputy director Greg  Roseman, a close friend of Castillo’s, of “influencing the  selection process” to benefit his friend.

“The IRS – where Strong Castle received well over 99 percent  of its 2012 revenues – employs Castillo’s long-time friend, Greg  Roseman, who oversaw each and every contract awarded to Strong  Castle by the IRS in 2012,” the report’s authors wrote.

The congressional committee also found that before launching the  IT company, Castillo filed for “disability rating” with the  Veterans Administration, claiming he suffered from a foot injury  he obtained at a military prep school in 1984. The rating  qualified Strong Castle as a “service-disabled, veteran-owned  small business,” which gave it preferential treatment in bidding  competitions. But Castillo never served on active duty, and  played college sports after the alleged injury.

“The case of Strong Castle and its cozy relationship with the  IRS is but one example of a deeply flawed procurement process in  the federal government,” the report says.

The congressional committee on Wednesday summoned  Roseman to interrogate him about the IRS contracts and his  relationship with Castillo.

“Mr. Roseman, when did you first become aware of a company  called Strong Castle Inc.?” Chairman Darrell Issa (R-Calif.)  asked the IRS employee.

Roseman invoked his Fifth Amendment right to remain silent and  refused to answer any questions. He has been removed from his  position as IRS deputy director pending the outcome of an  inspector general investigation into the contracts.

Strong Castle denies any wrongdoing and claims that it obtained  the contracts legally.

“Throughout our work with the IRS, we have never received any  improper preferential treatment and have competed fairly for  every contract that we have received,” the company told  Reuters in a statement.

But the report claims Castillo and Roseman met in 2003,  frequently exchanged phone calls and text messages, and formed a  long-lasting friendship. Upon the launch of Strong Castle,  Roseman sent Castillo a congratulatory text message which stated,   “U will be fortune 500 in no time.”

Issa started a probe into the potentially-inappropriate  contracting in February, and believes that there is “at least  an appearance of impropriety between the two men.”

“The IRS and Strong Castle have made a mockery of fair and  open competition for government contracts,” Issa said in a  statement.

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